A Study On The IPO Effect Of China’s Real Estate And Reasons For The Formation

The real estate industry is an important industry which affects the people’s live hood, theoperation of one country’s economy and the improvement of people’s quality. In recentyears, more and more China’s real estate companies have chosen the A-share market orH-share market listed. Based on the studies of many scholars’ researches on the IPO oflisted companies, the paper starts from the behavior of corporate finance and IPO, makes acomparative analysis of the business performance of China’s real estate companiesbetween before and after IPO, in order to examine the existence of IPO effect of China’sreal estate companies, and make a preliminary analysis of the reasons of the effect.Statistical software and empirical methods are used, drawing such a conclusion that theIPO effect of China’s real estate industry obviously exists. This paper selects48typicalIPO real estate companies, and studies on their6years (two year before IPO, the IPO year,and three years after IPO) financial indicators such as return on net assets, total assets netmargin, the total asset turnover and equity multiplier, and so on. Descriptive statisticalanalysis and paired t-test are chosen, indicating the overall level of profitability of China’sreal estate business is significant decaling after IPO, specifically in the return on net assets.In the factors of driving decline in return on net assets, total assets net margin, total assetturnover and equity multiplier occurred significant decrease, but changes in operatingmargin was not significant. Besides, this paper classifies the samples into four angles (thelocation of the company, the firm age, the asset size and financial capacity) and usessingle-factor analysis of variance to examine its financial indicators. The results show thatthe IPO effect is common existing in China’s real estate companies, and the effect is notimpacted by the factors as listing location, firm age, firm size and financing capability.